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Bitcoin's Tuesday Bloodbath Was the Bottom, Analyst Says
Many on-chain metrics show signs of capitulation and seller exhaustion in bitcoin.
Updated Feb 26, 2025, 3:12 p.m. Published Feb 26, 2025, 9:59 a.m.
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What to know:
- Short-term holders panicked and sent the most amount of bitcoin to exchanges at a loss since August, $3.9 billion.
- Realized losses hit $1.8 billion, the highest amount since the yen carry trade unwind in August 2024.
- The cryptoasset sentiment index posted one of its lowest levels since August 2024.
The crypto market experienced a severe downturn on Tuesday, and according to many on-chain metrics marked a bottom in bitcoin's price.
The total crypto market capitalization hovered just above $2.7 trillion—marking a nearly $1 trillion wipeout since its peak in December 2024, according to TradingView data. Several indicators suggest that Tuesday's sell-off may have marked a local bottom.
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Andre Dragosch, Head of Research at Bitwise Europe, highlighted that the Crypto Asset Sentiment Index hit its lowest level since August, coinciding with the unwinding of the yen carry trade, which saw bitcoin make a bottom at around $49,000.
"The Crypto Asset Sentiment Index just flashed a massive contrarian buy signal for Bitcoin. Widespread bearishness across flows, on-chain data, and derivatives suggests that downside risks are fairly limited. At these prices, the risk-reward outlook appears quite favorable," Dragosch noted.
On Tuesday, investors lost $1.8 billion — the largest single-day realized loss since August — when the yen carry trade unwind resulted in $3.2 billion in realized losses, according to Glassnode data.
Additionally, short-term holders, defined by Glassnode as investors who have held bitcoin for less than 155 days, sent 43,600 BTC ($3.9 billion) to exchanges at a loss— the highest level since August 2024.
These metrics are crucial in identifying potential market bottoms, suggesting that bitcoin may be nearing a key turning point.
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Bitcoin could fall to $10,000 as U.S. recession risk builds, Mike McGlone says
McGlone links bitcoin’s downturn to record U.S. market cap-to-GDP levels, low equity volatility and rising gold prices, warning of potential contagion into stocks.
What to know:
- Bloomberg Intelligence strategist Mike McGlone warns that collapsing crypto prices and a potential bitcoin slide toward $10,000 could signal mounting financial stress and foreshadow a U.S. recession.
- McGlone argues the post-2008 "buy the dip" era may be ending as crypto weakens, stock market valuations sit near century highs relative to GDP, and equity volatility remains unusually low.
- Market analyst Jason Fernandes counters that a drop to $10,000 bitcoin would likely require a severe systemic shock and recession, calling such an outcome a low-probability tail risk compared with a milder reset or consolidation.
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